What’s the Difference Between a “Living Trust” and a “Family Trust?”
A Living Trust is a trust that is created and activated while the owner is still alive. As part of the process, the property, accounts, and possessions of the owner are moved into the name of the trust. But the owner still has complete and exclusive control over everything that has been put into the name of the trust.
The Living Trust also includes a list of the “beneficiaries” who will receive whatever is left in the trust when the owner passes away. This transfer to the beneficiaries normally avoids the need for a legal probate proceeding when the owner passes away.
If the beneficiaries of the trust are friends of the owner or charities, the trust will typically be called by its generic name – a “Living Trust.”
But if the beneficiaries are family members of the owner – most often the spouse and children of the owner – then the trust is more often called a “Family Trust.”
Regardless of whether the owner calls it a Family Trust or a Living Trust, the rules that apply to the two are essentially identical. It’s up to the owner to decide which name he or she prefers.